TL;DR

Donald Trump publicly endorsed Palantir’s military capabilities days after famed short-seller Michael Burry disclosed a bet against the stock, arguing Anthropic was undercutting Palantir’s AI business. The exchange highlights growing tension between established defence AI contractors and frontier AI startups competing for government contracts.

Presidential endorsement meets short-seller pressure

Palantir shares rallied as much as 5% on Friday after Trump posted on social media praising the company’s “great war fighting capabilities and equipment,” adding: “Just ask our enemies!!!” The stock had already lost nearly a quarter of its value since the start of the year.

The presidential intervention followed a week of pressure triggered by Burry — the investor made famous by The Big Short for his bet against the US housing market before the 2008 financial crisis. Burry claimed Anthropic, now valued at $380 billion, was “eating Palantir’s lunch,” a post he subsequently deleted. In a follow-up blog post, he doubled down, saying he would not close his short position.

The Anthropic factor

The competitive dynamic between Palantir and Anthropic sits at the heart of a broader question for the AI defence sector. Palantir has been central to American military operations, with its Maven Smart System providing real-time data analysis during operations in Iran. The two companies also maintain a partnership on classified military work.

Yet Anthropic’s rapid growth selling AI tools to enterprises has spooked investors who worry Palantir’s premium valuation — built on government exclusivity — may face erosion as frontier AI firms expand into defence and national security markets.

Deep government ties

Palantir has signed several new multibillion-dollar agreements under Trump’s second term, including with the Department of Homeland Security and Immigration and Customs Enforcement. Several alumni have taken government positions, and CEO Alex Karp donated $1 million to Trump’s Maga Inc Super PAC in 2024.

Looking forward

For UK defence and intelligence agencies watching the US market, the Palantir-Anthropic dynamic foreshadows a similar reckoning: will established defence contractors maintain their moat, or will frontier AI capabilities reshape procurement across NATO allies?